We expect lower interest rates could support IT projects, economic policy to become less uncertain after the election, and tangible progress with AI products to be presented in upcoming conferences.
There's too much AI pessimism. AI (baskets) are cheap to year-to-date earnings trends, they may require fresh bad news to go down further, which we think is unlikely.
Goldman's Broad AI basket - which includes companies like Nvidia Corp. and Microsoft Corp, is down 11% from its 2024 high... The weakness goes beyond the selloff in Magnificent 7 stocks.
Fundamentals play a key role in Goldman's thesis. The bank expects net income from AI companies to roughly double in the next 12 months.
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